VA Loan Tips, Requirements and VA Loan Rates 2014

Veterans who are interested in buying a new home in 2014 are in luck! The mortgage interest rates are still very low, and the price of housing in North Carolina is very affordable. There are predictions that VA Loan Rates 2014 will go as high as 5% before the end of the year! Because of Legislation pending in Congress, some predict VA Loan Rates will be above 5% before the end of September!

VA Loan Rates 2014

The current VA Loan Rates for a 30 year mortgage in NC is lower than a Conventional Loan! The Veteran home loan rate today is 4.125% for a 30 year fixed rate mortgage, with an APR of 4.316%. The 15 year VA Loan Rate for a fixed rate mortgage is currently 3.625% with an APR of 3.826%. Again, this is about .3625% LOWER than a Conventional Loan, which requires a 20% down payment, and higher credit scores than a VA Loan.

Why are VA Loan Rates so low in 2014? That’s easy – because there’s a guarantee that the US Government will buy these mortgages, and banks don’t have to worry that the loans will “sit” on their books! There are no less than 5 Bills in Congress that are going to completely change Fannie and Freddie – assuming ONE of them goes through, this will dramatically change how Banks looks at mortgages later this year, making mortgage rates necessarily higher.

VA Home Loan Requirements 2014

Once you earn the VA home loan benefit, it’s yours for life. This isn’t a one-time lending option or a program exclusively for first-time home buyers. You can use these benefits over and over again. In fact, it’s possible to have more than one VA loan at the same time. So don’t let anyone claim you’re ineligible because you had a VA loan a decade ago. You may even be able to get another VA loan after defaulting on a previous one.

You can also have MORE than one VA Loan at a time. There are several situations in which a Veteran may need to buy a new home for their family, while they continue to have a home with a VA Loan on it. If you have enough Eligibility, and the circumstances meet these guidelines, we CAN make a Second Home VA Loan in North Carolina.

The VA Loan Underwriters are required to look at your application a little differently than other Mortgage loans. While a VA home loan is “guaranteed” by the Veteran’s Administration – that doesn’t mean that all Veterans qualify for a VA Loan. You must still meet all of the VA Home Loan Requirements, and those include looking at the money you will have left over at the end of the month after you make payments, This is different from traditional Debt to Income Ratios, and is referred to as Residual Income.

Residual income is an incredibly important financial requirement unique to VA loans, and it’s a major reason why no other loan program has had a lower foreclosure rate over the last five years. The VA wants veterans to have a minimum amount of money left over each month after the mortgage payment and other major expenses in order to cover everyday expenses like gas, groceries, health care and more. The benchmark varies by family size and geography.

Heading into the loan process it’s important to understand that you’re going to have to meet this guideline. This is another area where you may have to tweak your desired loan amount to make the numbers work. We mention this because child care is one of the items that VA Loan Underwriters consider in your Residual Income, and this is the ONLY mortgage program that considers that cost.

Self-employed veterans will be required to provide at least two years of tax returns, along with year to date P&L and Balance Sheets to properly document their income to a VA Underwriter. That’s just because in these economic times, self-employment income isn’t always stable and reliable, especially for newly established businesses. Unlike the “old days” when we had different mortgage rates depending on the “risk” factors of your loan – being self-employed will not affect your VA loan rates, you will still be eligible for the best rates offered – we just need more paperwork!

You could also be asked for tax returns and letters from an – we Accountant if you work for a “family owned” business or are otherwise employed by a family member. There’s an obvious conflict of interest when a family member is giving the VA Loan Underwriter income information – and because of that, the added requirement of documentation for self-employed borrowers, and those who work for a family business is a Veteran’s Administration VA Loan requirement.

VA Loan Tips 2014

As you are looking for your next home, and figuring out what your payments will be, and what price home you are going to look for – there are some things you can do that will make this process easier. Here are 5 of our VA Loan Tips for 2014:

Get your Student Loan documentation in order. The reality is the military’s education benefits may not always cover all expenses associated with College, or your spouse might have Student Loan debt. It isn’t uncommon for students to seek out loans to close any gaps. Deferred Student Loans might be counted in your monthly income, if we don’t have proper documentation – so go ahead and gather up all of the information you can about the status of these payments. Remember that any past due Student loans could keep you from qualifying for a VA Loan, so if you are behind – go ahead and set up a payment plan. Once you make 6 months of on time payments, we will likely be able to qualify you for a VA Loan in 2014.

Nine in 10 VA home buyers purchase without making a down payment. It’s also not uncommon for the seller to pay all of your closing costs. But you’ll still need money up front to cover things like an earnest money deposit, the appraisal and a home inspection. You may get all of that money back at the closing table. If you are buying a home that is more than $417,000, it will probably still be CHEAPER to purchase that home with your VA Loan benefits, because the VA Loan Rates are lower, and the down payment requirements are also less!

You can ask the seller to pay all of your closing costs, regardless of the total amount. The Veteran’s Administration is going to look at Seller Concessions, and those are capped at 4%. A Seller concession would include home owner’s Insurance policies, and your portion of the real estate taxes that are due. We have also seen situations where Veteran’s were in a Lease to Own, and wanted the Seller to credit them back part of their rent. Those items will be considered a Seller Concession, not closing costs, and they are (again) capped at 4% of the total loan amount. However, working with a great Real Estate Agent, who can help you negotiate Seller paid CLOSING COSTS will go a long ways when you are trying to negotiate the best deal. You can ask for the moon when it comes to the closing costs from the Seller, just remember that the house must APPRAISE for the total package!

Ask for information UP FRONT about the Home Owner Association (assuming there is one) for the neighborhood you are buying in. The Veteran’s Administration will not be reviewing these documents, if you are purchasing in a typical single family neighborhood – however, if you are buying in a new construction area, a town home where the association is doing much of the maintenance on the property or a condo, the VA is going to look at the Association pretty hard. They will need to have a “positive” budget figure, and reasonable assessments. It always surprises us when folks don’t look at what kind of play set, or how many cars they can have at their house before buying a home! Look at the documents and find out what the HOA restrictions are before you buy!

If you are a first time home buyer, you might also qualify for the NCHFA Program that includes up to 3% that can be used for closing costs. You can also qualify for Mortgage Tax credits (yes there are mortgage tax credits still available for First Time Home Buyer loans!) The Mortgage Tax Credits (MCC) could help you qualify for a bigger house, and will give Veteran’s up to $2000 a year in added tax credit (and you STILL get to write off the mortgage interest on your tax returns!)

If you are considering a VA Loans in Raleigh, and you are looking for the best VA Loan Rates – call us! We can give you tons of information about getting the best deal on a home here, and help you find out what you will qualify for a VA mortgage loan! We are here to help! Steve and Eleanor Thorne, Government Mortgage Loan Experts, 919-649-5058

About Eleanor Thorne

I see myself differently than most loan officers in the Cary/Raleigh market. As a rare Cary native, I see myself as an expert on the area, on mortgage industry changes & factors that effect rates! I've lived in Cary since 1968 - and I'm second generation "mortgage." I work with my husband, Steve Thorne Mortgage Loan Originator #60596 Equal Housing Lender